EUR/JPY is a forex quote that represents the exchange rate between the Euro and the Japanese Yen. Traders like to borrow the low-yielding Yen to fund carry trades and buy higher-yielding currencies like the Euro during times of optimism. However, during times of market stress, investors tend to avoid carry trades. EUR/JPY is affected by shifts in global economic performance and stability. The Eurozone debt crisis and the Bank of Japan's anti-deflation policy introduced in 2013 also contribute to the pair's volatility.
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Policy rates are unlikely to have peaked at 3.00%
The fact Largade & Co did not see current financial conditions as requiring a liquidity response now is a positive take. In rates and by throughput FX markets, there remains a clear – but now fully conditional – direction of travel: policy rates are unlikely to have peaked at 3.00%.,hence the EURO should strengthen on the crosses and could fly higher on the FED pause
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ECB will likely stay on the path possibly for a while longer
While expectations for Fed hiking have become significantly more uncertain, the EUR/USD staying bid suggests traders expect the ECB will likely stay on the path at least for this week and possibly for a while longer. As a result, the Euro looks well-positioned to move higher over the coming weeks – especially against crosses (e.g. SEK and GBP) – but also against the Dollar if the Fed pauses.